Brent Crude Erases All Price Gains Since Surprise OPEC+ Cut

Brent crude erased all of its gains since the shock production cuts announced by OPEC+ in early April as concerns over the health of the economy overshadow supply fears.

(Bloomberg) — Brent crude erased all of its gains since the shock production cuts announced by OPEC+ in early April as concerns over the health of the economy overshadow supply fears.

Mounting evidence of a global economic slowdown and the resulting weakness in broader equity markets has helped crude erase all of its OPEC+ driven gains. Brent’s prompt-spread flipped into contango for the first time since late January, excluding contract expiration dates. The shift reveals that traders see near-term supply outweighing demand.

The market has added back so much length over the past month and no one is left to buy it at the moment, said Jonathan Wagner, global head of crude options at Marex North America. There will be very little interest in buying crude until West Texas Intermediate falls to $75.72, filling the gap from OPEC+ production cuts, he added.

Yet despite the weakened demand outlooks, there are still some bullish tailwinds with industry reports expecting a drop in US nationwide crude stockpiles. Official government figures will be released later on Wednesday.

Investors will closely track reports this week including on US jobs, before the Federal Reserve’s May policy meeting. Two of the world’s biggest oil majors, Exxon Mobil Corp. and Chevron Corp., are scheduled to report first-quarter earnings on Friday and potentially provide commentary on the health of the industry.

More stories like this are available on bloomberg.com